Sansiri sells Standard shares to Hyatt

Shares of Sansiri Plc (SIRI) rose by nearly 5% on Wednesday after Thailand’s leading property developer announced an agreement to sell shares of the US-based lifestyle hotel Standard International to the Hyatt group for US$355 million.

In its filing to the Stock Exchange of Thailand (SET) on Wednesday, Sansiri board chairman Apichart Chutrakul announced the sale of 71% of its US subsidiary Standard International Holdings (SIH) to Hyatt Corporation and Hyatt International Corporation.

The agreement to sell all equity interests at a total purchase price of roughly $355 million comprises $150 million upfront to be paid on completion of the transaction, an earnout bonus of $10 million based on performance following the completion of the transaction, and an existing branded residence licence fee payment. The transaction is expected to be completed next month, he said in a statement.

“The transaction strengthens Sansiri’s financial position based on its favourable valuation and unlocks capital to be redeployed in another interesting opportunity as part its strategic goal,” said Mr Apichart.

“The sale also provides long-term benefits by leveraging Hyatt’s expertise and well-known presence through various company properties that will be managed or franchised under Hyatt, as well as other strategic synergies in the future.”

Shares of SIRI tallied 1.71 baht by midday yesterday, up 4.91%, with a trading value of more than 300 million baht.

Sansiri, managed by former prime minister Srettha Thavisin before he entered politics last year, acquired a majority stake in Standard International in 2017. The deal announced on Wednesday includes management, franchise and licence contracts for 21 hotels with roughly 2,000 rooms at The Standard hotels in London, New York and Bangkok, as well as boutique hotels such as Hotel Saint Cecilia in Austin, Texas, and Hotel San Cristóbal in Baja California, Mexico.

Sansiri will retain ownership of several properties managed or franchised under Hyatt. These include The Standard, Hua Hin; The Standard Residences, Hua Hin; The Peri Hotel, Hua Hin; The Peri Hotel, Khao Yai; and The Manner, a new luxury brand debuting in SoHo, New York City, in September 2024.

Kasikorn Securities said Sansiri would be able to record profits from the transaction of more than 1 billion baht based on a preliminary assessment, with a large amount of cash flow for business expansion and debt repayment.

InnovestX Securities said the hotel business is not Sansiri’s core business, noting its past performance always recorded losses.

“If the deal is completed in the third quarter, SIRI would not need to issue additional bonds to pay off debt of 4.9 billion baht in the fourth quarter,” said the brokerage.

According to Krungsri Capital Securities, Sansiri recognised losses from Standard International of around 400 million baht this year. With the additional cash flow, it would help reduce debt and could be used to develop other projects, the brokerage said.

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